Case Studies

Case Study: A self-employed worker with accumulated tax liability

These case studies are not true stories. They do not constitute actual client testimony. However, they are based on experiences observed by our Licensed Insolvency Trustees. 

These fictional case studies are meant to demonstrate the possible outcomes of a debt solution. In reality, each situation is unique. All individuals struggling with debt should consult a Ginsberg Gingras Licensed Insolvency Trustee to determine the best solution for them, and its effects.

A consumer proposal helps Paul to restructure his company and get a fresh start

Paul is a 23-year-old carpenter joiner. Since he entered the labour market, he has worked as a contractor for a variety of business owners. His subcontractor status led him to work as an independent contractor.

Paul devotes much of his time to his passion for building houses. However, he struggles to do his accounting and budget appropriately for his business expenses.

Because of outstanding tax liability, the Canada Revenue Agency (CRA) has seized Paul’s bank account. Trapped, he makes an appointment with a Licensed Insolvency Trustee (LIT) at Ginsberg Gingras and lays out his situation.

Paul’s debts before his proposal

Tax liability$22,500
Credit card 1$1,700
Credit card 2$2,250
Debt total$26,450

Since he launched his career as an independent contractor, Paul has had to acquire certain work equipment and tools to earn a living. Now he is worried that he will lose all his tools if he declares bankruptcy. The Licensed Insolvency Trustee (LIT) explains the consumer proposal option to Paul. Thanks to this solution, Paul feels reassured that he will be able to keep his tools. He will also be able to keep all his other possessions, because there are no seizures involved in a consumer’s proposal.

The decision to file a consumer proposal was not easy for Paul. Fortunately, after filing his proposal, the LIT was able to lift the seizure on his bank account. Paul immediately felt reassured about his choice.

To repay his debt, Paul made monthly payments of $200 each for 60 months. At the end of his proposal, all his debts were cleared, including his tax liability. He therefore repaid $12,000 over five years to be pardoned for a debt of $26,450.

Paul has learned from this misadventure. He realized the importance of proper bookkeeping and of producing and paying his taxes on time. This is why Paul now entrusts this task to an accountant.

Paul’s debts after his consumer proposal

Tax liability$0
Credit card 1$0
Credit card 2$0
Debt total$0

In summary, Paul primarily accumulated tax liability while working as a subcontractor on construction sites. To resolve his financial problems, the consumer proposal was his best solution. In addition to clearing his debts, Paul kept the tools he needed to continue working in his profession.

Despite his proposal, Paul was able to continue his activities as an independent contractor on construction sites. On a personal level, the only impact he felt was on his credit rating. He is working to rebuild it, however, by maintaining good financial habits. Among his peers, only those he chose to divulge his concerns to are aware that he was insolvent.

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